Loan Forgiveness Certification Form

The U.S. Small Business Administration has released a form of one page which makes it simpler to request the cancellation of Paycheck Protection Program loans. The form also contains newly updated forms that are in line with the current stimulus law. 

The COVID-19 relief plan that Congress approved last month renewed the PPP with $284 billion of funding for small businesses seeking forgiven loans to help deal with the financial fallout of the coronavirus epidemic. The package also mandated the SBA to issue simplified forms within the first 24 hours of the legislation being approved by the lawmaker to streamline the process of applying for forgiveness, along with conditions designed to facilitate more bank loans by community banks, specifically for minority-owned companies that were unable to obtain loans last year.

Loan Forgiveness Certification Form

“The Small Business Administration met the requirements to release the one-page form for PPP loan forgiveness by 24 days after the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also released more updated forms.”

First Draw PPP Loan forgiveness terms

Loan Forgiveness Certification Form – For borrowers who are eligible First Draw PPP loans can be qualified to be forgiven. This applies if the loan disbursement occurs within an 8 to 24-week timeframe.

  • This is also true for compensation and employees.
  • The loan funds are used on payroll and other expenses that are eligible and
  • At least 60% of the profits are used to pay for payroll expenses

Second Draw PPP Loan Forgiveness Conditions

Second Draw PPP loans made to borrowers who are eligible can be granted full loan forgiveness if during the 8to 24-week covered period following loan disbursement:

  • Employee and compensation levels are maintained in the same way as is required for the First Draw PPP loan
  • The loan proceeds can be used to pay expenses for payroll or other expenses that are eligible.
  • At least 60% of profits go towards payroll costs
  • How and when to apply for loan forgiveness

When all of the loan funds have been utilized the borrower is eligible to be forgiven. Borrowers can request forgiveness at any time until the loan’s maturity date. If the borrower does not apply for forgiveness within 10 years of the end of the period covered, then PPP loan payments can not deferred any longer, and borrowers will begin making monthly payments to their PPP lender.

Download Loan Forgiveness Certification Form

Gallery of Loan Forgiveness Certification Form

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